Be a PROFITABLE Badass Small Business Owner

Subcontractor Bookkeeping Mistakes That Can Cost You Money!

·16 min·1 clip

Tammy warns small business owners hiring subcontractors they're likely breaking rules and risking serious financial penalties.

The episode is a solo educational monologue where host Tammy addresses small business owners who hire subcontractors. She opens with a warning that many are 'rolling the dice' by not following proper rules. Tammy clarifies she is not a CPA but shares practical insights from bookkeeping and coaching. She identifies the first major problem: business owners often treat long-term, exclusive workers as 1099 subcontractors when they legally should be employees on payroll. The second issue is poor payment tracking; using Venmo, cash, checks, or Zelle without attaching specific names to each transaction in accounting software like QuickBooks. This makes it impossible to properly issue 1099 forms by January 31st for payments over $600. Tammy explains that failing to issue 1099s means the business owner loses the tax deduction for that expense and may end up paying the taxes on that money themselves. She shares that some clients have paid $10,000 extra in taxes due to this. Tammy recommends using Zelle for payments because it automatically captures names, unlike Venmo. She also discusses the hidden consequence of subcontractor turnover: workers often quit after receiving their first 1099 and realizing they owe significant taxes they didn't set aside. Tammy argues that converting long-term subcontractors to employees, despite higher costs due to employer taxes, increases loyalty and stability. She notes that even one-time subcontractors, like a friend hired for concrete work, require a W-9 form. The episode concludes by urging listeners to 'get legit' as their business grows to secure all possible tax deductions and build a reputable operation.

As heard by us

A practical warning about subcontractor classification, payment trails, W-9s, 1099s, and the cost of sloppy bookkeeping.

Subcontractor bookkeeping turns into a margin issue when a business treats a steady helper like an employee, pays through mixed channels, and waits until January to sort out tax paperwork.

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Why you'd press play

You hire by the day or by the job, and you want your subcontractor trail cleaned up before 1099 season corners you.

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